Devon reports earnings of $393M for first quarter

Devon Energy Corp. earnings dipped slightly in the first quarter due to what the company called "unusually wide" Canadian oil price differentials.

Devon on Wednesday reported first quarter earnings of $393 million, or 97 cents a share, down from $416 million, or 97 cents a share, for the same period of last year.

The company also reported production increased 10 percent in the quarter to 694,000 barrels of oil equivalent per day. That figure represents the highest daily production rate in Devon's history from its onshore North American properties.

"Devon's financial position remains rock solid," CEO John Richels said in Wednesday's earnings call. "We ended the quarter with $7.1 billion of cash on hand and we continue to have one of the lowest debt-to-cap ratios in the industry."

Devon's earnings were lower than the $1.43 a share estimated by analysts. The company's stock dipped Wednesday to $68.06 a share, closing down $2.59.

Devon increased its first quarter liquids production for the sixth consecutive quarter, led by a 26 percent increase in oil production.

That increase was fueled by record production from Devon's core areas in Canada, Texas and Oklahoma.

"Operationally, we're off to an outstanding start this year with record production from each of our four cornerstone development project areas: Jackfish, the Permian Basin, the Barnett and Cana," said Dave Hager, Devon's executive vice president of exploration and production. "We also continue to move forward with evaluating and de-risking the upside potential in our various emerging and new ventures plays."

Richels said the company's financial strength will help it weather the current low natural gas prices.

While other companies scramble to move their operations to liquids-rich plays, Richels said Devon will not suffer even if gas prices fail to recover.

"Even if the current pricing environment were to persist indefinitely our existing base of oil and liquids rich projects provides us many years of profitable growth," he said. "To put this into perspective, roughly half of our 16.2 billion barrels of risk resource is oil and NGLs (natural gas liquids) with crude oil accounting for nearly 5 billion barrels of this total resource.

"So our resource base provides the ability to shift investment to the most lucrative opportunities depending on market conditions."